#ConsumerWatch: NCC timeshare report: a win-win for the industry

The public hearings into the timeshare industry at the Cape Town Lodge last July. There’s no recourse yet for consumers frustrated by lack of service, poor lodgings, unavailable accommodation and useless points. File picture: Henk Kruger/African News Agency (ANA) Pictures

Johannesburg - It seems to be a case of mañana, mañana (Spanish for later, sometime, but don’t hold your breath) with highly publicised inquiries in South Africa.

Vast resources are thrown at problems, widespread investigations are conducted, reports are released and then there’s no follow-through. A bit like date night for couples with young children. Disappointment all round as someone inevitably goes to sleep on the couch.

A year and a half after it first launched its inquiry into the timeshare industry, the National Consumer Commission (NCC) finally released its report, but for those saddled with contracts that can’t be cancelled there’s no relief.

And action is what we need. Because consumers locked into contracts “in perpetuity” and those stuck with pointless points have become so desperate that some felt compelled to hound the NCC for years, admitted Consumer Commissioner Ebrahim Mohamed. That’s hardly a badge of honour; it speaks to the inability of the commission to fulfil its mandate: to protect consumers.

Another complainant from the Free State tragically tried to take her own life because she felt backed into a corner over her mounting debts.

Some background: Last year, in May, the NCC launched the inquiry.

This after it had tried - and failed, embarrassingly - to take the industry on in a more direct manner: by dragging holiday clubs to the Tribunal. In 2015, the commission had to withdraw its case against the Univision holiday club group on technical grounds, shortly before it was due to go to the tribunal. So it launched this extensive inquiry.

The NCC has been swamped with complaints about holiday clubs - specifically those that operate on a points system, as opposed to timeshare companies that offer tangible rights, where property is sold in terms of the Sectional Titles Act and belongs to consumers.

According to the Vacation Ownership Association of Southern Africa, South Africa has around 750 000 timeshare owners.

That’s 10 000 up from a 2011 Grant Thornton study, which also found there to be at least 400 000 belonging to clubs that use points systems.

The commission’s main gripes have always related to perpetuity contracts(those that you effectively take to the grave and might even saddle your estate with), deceptive marketing practices, and the absence of exit or cancellation clauses (as per Section 14 of the Consumer Protection Act).

After engagement with the industry, interest groups and extensive public consultations - which Mohamed described as “distressing”, especially when seeing elderly people crying - that took the commission to all nine provinces, the report was submitted to him at the end of March.

He then sent it back to the committee, which submitted the final report in September for industry comment.

In essence, the report makes some wonderful recommendations: that an industry regulator be appointed to conduct audits of properties/facilities and to allow consumers an avenue of complaint; that Section 14 of the CPA be enforced, allowing consumers an avenue to exit fixed-term contracts; that timeshare companies do more to ensure their members attend annual general meetings; and that priority be given to desperate consumers, such as the elderly and unemployed.

What it doesn’t do, though, is offer a light at the end of the tunnel.

For consumers such as the desperate woman from the Free State, or the average Joe heavily indebted and frustrated by the lack of service, poor lodgings, unavailable accommodation, useless points, there is no recourse yet.

The report made recommendations - advised some legislative changes, including a revision to the Property Time-Sharing Control Act - but it’s not the final word or arbiter in the matter, and it’s not “going after” the industry. Instead, Mohamed stressed that the government wanted to “work with” the industry.

The NCC is also palming off its timeshare problems to the Consumer Goods and Services Ombudsman, who’s been able to cancel just over 50% of the timeshare issues that she’s received (68% of which relate to cancellations). The ombud scheme is voluntary, so holiday clubs are under no obligation to comply with her recommendations.

The chief director in the consumer and corporate regulation division at the Department of Trade and Industry, MacDonald Netshitenzhe, said his department needed time to look at the report.

“Now that the report is released, we need to analyse it and maybe also seek legal opinion to guide us correctly.

“The report is multi-faceted, and work internally is going to take place this year,” he said, adding: “You know, we have an election coming up next year. And people will need to find their feet in their new positions.”

In summary: It’s unlikely there will be legislative change next year because there doesn’t seem to be political will.

With most of these recommendations requiring industry buy-in or the whip of legislative change, consumers might as well hope on unicorns. Rather approach a good lawyer for assistance because, at this rate, you’re going to wait a very long time.

It’s not good enough, expecting patience from consumers who can’t afford their levies, can’t use their points, or don’t want to because they are not getting any useful service - which they’ll be required to pay while new government appointees find their feet.

* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.